Filecoin the Latest Crypto to Soar in Market Bounce

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Filecoin the Latest Crypto to Soar in Market Bounce
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key takeaways

Filecoin has rallied over the past week. It was up 19.4% on the day. Despite heightened macroeconomic tensions, the sentiment in the cryptocurrency market has shifted. Traders remain divided on whether the market has bottomed.

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Filecoin’s FIL is up 19.4% today.

Filecoin jumps in market rally

Filecoin outperformed the rest of the cryptocurrency market.

FIL/USD (Source: CoinGecko)

The decentralized storage network’s FIL token is up 19.4% today, outpacing most major cryptoassets like Bitcoin and Ethereum. Several other coins, including Polkadot’s DOT and Kusama’s KSM, also saw gains, although Filecoin is the strongest performer on the top 100 cryptocurrency charts today. It is currently trading at $9.90, up 75% over the past week, according to CoinGecko.

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The uptick comes during a turbulent time for the cryptocurrency market. Prices have been falling for months due to macroeconomic tensions, weak markets and the collapse of giants such as Terra and Three Arrows, but the market began to show signs of recovery in July. Last week, the Federal Reserve raised interest rates by another 75 basis points, while the Bureau of Economic Analysis revealed that the U.S. economy shrank for the second straight quarter, signaling the start of a “technical recession.” While this development is often seen as negative for risk assets, crypto markets surged last week, suggesting the market may actually have priced in macro uncertainty.

Crypto market rebounds

After a brutal May and June, Bitcoin closed July in the green for its best monthly performance since October 2021. Meanwhile, Ethereum has led the market in recent weeks amid growing anticipation of its landmark “merger” event, which is tentatively set to live in mid-September. When bitcoin and ethereum rise, liquidity tends to flow to other cryptoassets with lower market caps, partly allowing assets like Filecoin to bounce back as confidence returns.

Interestingly, some of the strongest performers have been linked to so-called “merger deals” on Ethereum. For example, Ethereum Classic’s ETC has gained 44.4% over the past week, likely as the narrative surrounding its proof-of-work consensus mechanism has strengthened (the Ethereum fork will continue to use proof-of-work after its more famous sibling rotates) in Proof of Stake), causing Ethereum’s soon-to-be-redundant miners to flock to the network. Liquid pledge protocol Lido’s governance token LDO rose 31.3% over the same period.

With many crypto assets showing bullish strength, some market participants have raised the question of whether a “bottom” (a term crypto enthusiasts use to refer to the lowest price point of a bear cycle) is likely, but traders remain divided. While some of Crypto Twitter’s top traders asserted that the bottom had arrived, other Say They are bearish due to the macroeconomic environment and the nature of previous bear markets (if Bitcoin and other markets rise for the rest of the year, the latest plunge will be the shortest bear market in cryptocurrency history).

The global cryptocurrency market capitalization is currently around $1.1 trillion, about 63.3% below its November 2021 peak.

Disclosure: At the time of writing, the author of this article owns ETH and several other cryptocurrencies.

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